Gerry Harvey sees bargain in Harvey Norman

Eli Greenblat, Ian McIlwraith

Raking them in . . . Gerry Harvey buys more than half a million shares in Harvey Norman. Photo: Ben Rushton

Gerry Harvey has put his money where his heart is, spending $1 million to buy more shares in his retail baby Harvey Norman Holdings when the shares hit an historic low on Monday.

In his first substantial shareholding notification in almost a decade, Mr Harvey revealed that he bought 550,000 shares at an average price of $1.82.

Harvey Norman shares dipped under $1.80 on Monday as retailing stocks were dumped in the wake of Billabong International’s shock earnings downgrade, and were recently trading 5 cents higher, or 2.8 per cent, at $1.865.

Harvey Norman director and company secretary Chris Mentis said Mr Harvey had showed support by dipping into the market because the net tangible asset backing of Harvey Norman stock is $2.15 - making the shares ‘‘a great buy’’ at these levels.

It is not the first time Mr Harvey has stepped in to shore up his company’s falling shares. The filing today reveals that he spent almost $8 million buying 2 million shares at the beginning of March in 2008 when Harvey Norman shares dived from just short of $5 each to $4.

Because his holding had not varied by more than 1 per cent, in spite of that earlier buying, today’s statement was his first substantial shareholding notice since January 2002.

The purchase, along with the issue of shares under a deferred executive incentive plan, pushes Mr Harvey’s holding in the retailer to 312.5 million shares from 309.186 million, taking his ownership of the company to 29.4 per cent from 29.2 per cent.

The purchase comes despite woeful times for all retailers, including Harvey Norman, as consumer confidence hovers at recessionary lows and savings rates hit record highs.

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Harvey Norman company secretary Chris Mentis told BusinessDay Mr Harvey bought the shares because, at its current price of $1.845, it was trading well below the company’s net asset backing of about $2.15.

The ASX notice shows Mr Harvey bought the parcel of shares on market on December 19 when Harvey Norman was trading at around $1.785 when the stock also closed at a record low.